Kathmandu. The Securities Board of Nepal (SEBON) has prepared the Margin Credit Transaction Regulation, 2083.
While making the draft of this regulation public, SEBON has sought suggestions from the stakeholders. According to Sebon, the regulations will be finalized after studying the suggestions received.
Sebon has clarified the main purpose of the regulation. The regulations have 12 main objectives.
Here are the main objectives
- To establish a clear, systematic and credible regulatory framework for margin debt transactions in the securities market.
- To provide margin credit facilities to investors in a responsible and safe manner.
- Controlling excessive financial leverage and market risk in margin loan transactions.
- To ensure the financial, technical and risk management capacity of the licensed margin lending institution.
- Risk mitigation through initial margin, maintenance margin, credit limit, and concentration limit.
- Adequate capital, liquidity, internal control, good governance and risk management in margin lending institutions.
- To maintain market stability in the face of market crises, large price falls, excessive margin calls and forced liquidation.
- Provide for effective regulatory reporting, inspection, supervision and investigation.
To conduct margin loan transactions only in securities with qualified and sufficient liquidity.TAG_OPEN_li_29
Continuously monitor the risk of customers and organizations through daily market-to-market and automated margin call systems.TAG_OPEN_li_27
To ensure the separation and protection of the client’s cash, securities and other assets.TAG_OPEN_li_26
To develop a technology-based, secure and transparent margin loan trading system.TAG_OPEN_li_24
